Understanding the investment definition is crucial as sometimes, it can be difficult to choose the right instruments to fulfill your financial goals. Knowing the investment meaning in your particular financial situation will allow you to make the right choices.
Investment may generate income for you in two ways. One, if you invest in a saleable asset, you may earn income by way of profit. Second, if Investment is made in a return generating plan, then you will earn an income via accumulation of gains. In this sense, ‘what is investment’ can be understood by saying that investments are all about putting your savings into assets or objects that become worth more than their initial worth or those that will help produce an income with time.
Financially speaking, an investment definition is an asset that is obtained with the intention of allowing it to appreciate in value over time. Generally, investments fall in any one of three basic categories, as explained below.
Keeping aside investments in real estate and assets like jewellery and all, when it comes to different instruments, another aspect of understanding ‘what is investment meaning’ is to know about different types of investments.
The first refers to equity investments, and the second category includes debt instruments. If your investment objectives match, equity investments can offer greater returns and carry relatively higher risk. While debt instruments are less risky, but offer relatively low returns.
Further, what is investment meaning can also be understood from the perspective of how they are acquired.
This includes shares of ownership of any company and helps you earn dividends in return.
Wondering what is investment meaning in terms of bonds? It means lending your money to an institution or government, for which you receive fixed interest at regular intervals and also the face value upon maturity